Wind Tussled and Optimistic

Wind Tussled and Optimistic

By Sean Roth

Real Estate Editor

Conrad Szymanski is sure to experience more than the usual anxiety next hurricane season. The president of Beallis Department Stores watched four hurricanes in six weeks damage several retail stores statewide and permanently close one of them.

Still, he says: iIt was a wonderful year.i

iAs a whole the Florida economy was by and large rock solid,i Szymanski says. iBut when the hurricanes hit in August and September it sure changed my whole perspective on the year.i

The storms not only caused physical damage to the Bradenton-based retailersi stores, but the realignment of construction personnel to repair the damage also curtailed the chainis expansion plans. To top that off, lost business days cost the company as much as $15 million. Including the loss of water-damaged merchandise, the storms cost Beallis Inc. at least $20 million.

iIf all I did was drive back and forth to work I would think that everything was back to normal,i Szymanski says. iBut if you drive south or east of here you would quickly discover that a lot of regions are far from normal. Growth this fall did not occur as originally planned. We went through the season with four fewer stores than we had anticipated.i

Several new department stores have been delayed by three to four months, he says.

The executive says the full effect of the storms has not yet been felt. iTourism has not really recovered,i he says. iIn areas like Daytona Beach the beachside hotels are all full or reasonably full. But the people that staying there are all relief workers.i

Yet, Szymanski is cautiously optimistic.

If Florida sees fewer storms or none at all over the next few years, the state should recover well, he says.

Fortunately for the Sarasota-Manatee business community, Szymanskiis experience in 2004 was the exception. The year was a heyday for most regional businesses.

Real estate transactions and values were up again (see Real Estate page 5). Tourism tax rates for the two-county market returned to pre-9/11 levels or better (see Tourism page 8).

The regionis job growth has been on the upswing. Unemployment in the two-county market has hovered near or below 3% for the past year, according to the Florida Research & Economic Database. A preliminary calculation for November suggests Manatee Countyis unemployment rate hit 3%, its lowest level since December of 2000. Sarasota Countyis preliminary calculation for the November unemployment rate is a lowly 2.8%. Thatis good news considering the statewide unemployment rate for November is projected at 4.3% and nationwide itis above 5%.

Nationally, the economy looks stable and growing. The national Gross Domestic Product grew by between 3% to the mid 4% in 2004. In addition, the Conference Boardis December 2004 Consumer Confidence Index showed a significant rebound in confidence from 92.6 in November to 102.3. The expectation index also rose to 99.9 from 90.2.

It looks like all the pieces are in place for a productive 2005.

Bad news, first

Still, thereis bad news: The four hurricanes appear to have extended citrus canker bacteria throughout the state. So far no large-scale new cases in the two-county market have been announced, but since September the Florida Department of Agriculture and Consumer Services has found canker in Charlotte, Collier De Soto, Highlands, Lee, Orange and Osceola counties. Growers have their fingers crossed.

Aside from the hurricanes, the worst news in 2004 came from Tropicana Products Inc. and Sidel Packaging.

The juice giant announced in December a plan to reduce as many as 100 jobs at its Bradenton plant. The reductions followed a similar pattern of Christmas cheer that PepsiCo Inc. spread in i03 when it announced plans to move Tropicanais corporate offices to Chicago and cut and/or relocate a total of 300 jobs.

On the positive side, Tropicana continued to add several million-gallon, multimillion-dollar juice tanks to its Bradenton site and even more importantly it is still one of the countyis largest employers with about 1,800 employees.

Sidel, a French manufacturer that develops packaging systems for beverage and food, let it slip in October that it plans to close its Bradenton plant in phases throughout i05. The move was part of the companyis staff and plant cuts internationally.

Town afire

The banking and mortgage business fared well in 2004.

iItis been a banner year for banking in Sarasota,i says Tramm Hudson, West Florida Region executive for RBC Centura Bank. iThis town has been on fire. We ought to change the state bird to the construction crane.i

This year was RBC Centurais first in the market following its acquisition of the Florida operations of Provident Financial Group in mid-2003.

iWe are very bullish on 2005,i Hudson says. iI think what the Fed is trying to do is temper the overheating of the economy. We have not seen any dampening of new home purchasing or business investing.i

As to the mega-mergers and acquisitions, Hudson says that the Sarasota-Manatee market is still ripe.

iThere are still a lot of big banks that donit have a retail presence here, and we are an attractive market,i Hudson says.

Budd Moore, of Moore Mortgage Group, says refinances have been declining with each fed rate increase so eventually the mortgage refinance wave should be at a minimum. But thatis not expected to happen in 2005.

iIn i04 we saw the 30-year mortgage stay fairly near the mid-to upper 5s,i Moore says. iThe rate is probably going to the upper 5s to lower 6s through i05. Rates will not change drastically yet. Ultimately things will slow down though.i

Here come the boomers

Homebuilders are building at record levels in the two-county market with no let up in sight. Pat Neal, owner and president of Neal Communities of Southwest Florida Inc., expects home construction in Florida to be on an upward swing for at least the next decade.

iYouive got the start of the (baby) boomers,i he says. iThe first of the boomers were born in 1946 and with an average age of retirement of 58, that is 2004.i

Neal took several steps to prepare his company for the wave of new retirees.

iWe bought land.i Neal says. iWe now own about 8,000 lots with partners. Second we worked with our technical department on ways to communicate with the field. We also worked to make sure our people were better trained on the electronics. It feels like pretty much smooth sailing.i

If Nealis bookings through May of i05 are indicative of the companyis growth, sales in the New Year could be up by 40% over 2004.

Welcome mat

Larry Starr, of ResortQuest International, isnit worried about local or national tourism; what has him cautious about 2005 is overseas visitors. So far, though, Starr has little reason to be concerned. According to tourism tax figures for both counties, tourism is doing well.

iWhat we are seeing is that we are better month over month than we have been historically prior even to 9/11,i Starr says. iIt looks like there has been quite a bit of pent up demand for vacations.i

Starr says that international tourism will likely be hurt the most by the 2004 hurricane season.

iThe media overseas reported the hurricanes in such a way you thought all of Florida had been heavily damaged,i Starr says. iWe are hearing from tour operators that a lot of U.K. visitors are concerned not as much by the damage, but they donit want to go through a hurricane. So we will see how quickly their memories fade. I think we could quite possibly lose that international traffic and make it up with business instatei

With the conversion of several of the local beach hotels into condos, there has been an increase in condo hotels.

iWe are not really seeing a big decrease in the number of units on the market,i Starr says. iThe Silver Sands, the Tortuga (Inn), the Tradewinds (Resort), the Cabana Beach Club, Holiday Beach (Resort), the Sea Bird (Beach Resort) on Longboat Key they have all come under new management in the last 12 months.i

He estimates that only about 500 units in the local market have been lost permanently, primarily from two projects: the Half Moon Beach Club and the Holiday Inn on Longboat Key.

Restaurant expansion

Ken Pendery expects the new year to be the cusp for some exciting times. The co-owner and president of Lakewood Ranch-based First Watch Restaurants Inc. plans an expansion in 2005, but even more growth is expected in e06.

The company, which projects sales of $50 million for 2004, plans to open six to eight new restaurants nationally in 2005.

iWe are considering building on the East Coast (of Florida),i Pendery says. iThat would be a completely new market for us. If we decide to go in there it would represent a pretty large commitment; we would build between 10 and 15 stores. We are projecting $54 to $55 million (in sales) next year.i

In 2006, the restaurant plans to accelerate its growth to 20 to 25 stores a year.

iWe just took in a pretty large capital infusion to set up for that aggressive growth plan,i Pendery says. iWe are just planning to digest it and get ready.i

Funneling the fiber

Verizon Florida Inc. has big plans for the Tampa Bay area. The firm filed an application with Sarasota County to provide cable TV service along fiber optic lines. Verizon, which is looking at the fiber optic roll out nationwide over 10 to 15 years, appears to be looking at the local market on the front end of that schedule.

Verizon expects to eventually convert the entire copper-wire network nationwide because of fiberis resistance to natural elements such as water and electricity. The fiber network also allows Verizon several more possible business lines, such as cable and broadband Internet provider. Bob Elek, Verizonis Florida spokesperson, says the company will employ another 400 people in Florida by the end of 2005 to handle the fiber-optic network.

A.J. Long, CFO of VenVest Inc., a Sarasota-based home-services company with franchise brands and training and advisory services for independents contractors, says 2004 was really good, but the New Year will be pivotal. The company plans to go public in late 2005.

iWe have been profitable every year since 1999,i Long says. iWe did $40 million in i03, $65 million in i04, and we should be close to $120 million in i05. We have lots of merger and acquisition activity planned.i

Aside from the usual rigmarole of entering the public-stock arena, VenVest is looking at the acquisition of 16 companies, which could add another $60 million to the companyis bottom line.